CrowdCrypto Newsletter by Robin Sosnow, a securities attorney in NYC, graduate school professor at CMU, and founder of LawLab.The goal of this newsletter is to share valuable insights, incite conversation, and to bring awareness to the evolving regulatory

CRYPTO NEWS

🇺🇸 USA Regulatory Spotlight:

🔥New York State’s controversial BitLicense regulation may be one step closer to revision, as NY lawmakers on Friday agreed that a bill to reform may come “very soon”. The NY State BitLicense regulations were introduced in 2015 in attempts to regulate business use of virtual currencies, but has proven to be prohibitive as only three BitLicenses have been granted since its adoption.

🔥🔥Cloud-based messaging app Telegram destroyed the blockchain fundraising record previously held by Filecoin, raising $850 million in an ICO that began Jan. 29. It is reported that Telegram plans to raise $1.2 billion at the conclusion of the sale.

🇷🇺Russia continued their move towards embracing a blockchain democracy, integrating the ethereum blockchain into their “Active Citizen” program, where residents of the city of Moscow vote on initiatives to improve the city. The inclusion of blockchain technology is a move towards voter-government transparency, with opportunities for voters to monitor the voting process in real time on the blockchain.

🇯🇵In Japan, 16 cryptocurrency exchanges have banded together to begin the process ofcreating a self-regulatory body after the infamous Coincheck theft that resulted in $530 NEM being stolen less than a month ago. The goal of this initiative is to provide investors with greater security and to create an environment of regulatory practices that all accredited exchange operators will adhere to.

🔥🔥🔥This week, UK crowdfunding platform SyndicateRoom released a report indicating that investors in early-stage equities, such as startups, have enjoyed seven consecutive years of 30% growth. The report analyzed 519 UK startups founded between 2011 and 2017 and found that the FInTech industry posted the highest growth rate at 63%. Read the in-depth report here to find out more about the strength of startups.

On Feb. 28, innovative funding platform PITCH drops and with it comes a new wave of token investment into startups. Entrepreneurs post summaries of products, prepare on-demand pitches for live audiences, and offer tokens for purchase during the live pitches to fund startups.

It’s still the beginning of the year while 40 ICOs raised over $1 billion in 2018 so far the nascent industry is on pace to top last year’s mark of $5.6 billion.

With over 40 ICOs and over $1 billion raised already in the new year, the nascent industry is on pace to top last year’s mark of $5.6 billion.

2018: AN EVEN BIGGER YEAR FOR ICOS?

Last year, there were 902 so-called Initial Coin Offerings (or ICO) projects tracked by TokenData. Out of that amount, 142 failed prior to the offering, and another 276 failed after raising funds.

But despite a lackluster success rate of about 48%, startups still managed to raise $5.6 billion USD in 2017, according to Business Insider.

Just under a half (435) of the ICOs were considered to be a success, raising an average of $12.7 million, while the ten largest offerings comprised25% of the total money raised, according to TokenData.

In 2018 so far, the trend is not showing any signs of slowing down. With 48 ICOs into the year, the amount raised so far exceeds $1.1 billion, according to data from Coinschedule.

What’s more is that this figure does not yet include the Telegram ICO that already secured over $850 million in a pre-sale as it aims for its goal of $2 billion later this year.

The top three ICO categories so far in 2018 include Trading & Investing, Finance, and Communications. These comprised over a third of all offerings. Moreover, the lion’s share of this sum ($525 million) has been scooped up by the top ten ICO projects in Pareto fashion, led by Envion—a company promising “off-grid mining solutions” that managed to raise $100 million.

At this rate, ICO projects could raise well over $7 billion USD by the end of 2018. But if last year is anything to go by, the pace could ramp up at any time as an explosion of ICO activity and funds raised occurred in the second half of 2017.

Innovators from top institutions and tech titans are in a race to develop green blockchain innovations to address demand by businesses.

Innovators from top institutions such as M.I.T. and Cornell University and tech titans such as IBM and Intel are in a race to develop green blockchain innovations to address demand by businesses.

In order to unleash the power of blockchain – the technology behind bitcoin – for a wide range of business purposes, energy efficiency is key, developers said.

The original blockchain runs on an algorithm that could eat up more energy than Argentina this year, Morgan Stanley estimates.If blockchain technology is going to revolutionize how we transact with each other, computer scientists need to solve one big problem: It can consume way too much energy.The original blockchain, which underlies bitcoin, runs on an algorithm that could eat up more energy than Argentina this year, Morgan Stanley estimated.

“Businesses have every incentive to avoid bitcoin’s waste. It’s very, very expensive to run things the way bitcoin runs things,” said Cornell University computer science professor Emin Gun Sirer, co-director of the school’s Initiative for Cryptocurrencies and Smart Contracts.

If blockchain technology is going to revolutionize how we transact with each other, computer scientists need to solve one big problem: It can consume way too much energy.

The original blockchain, which underlies bitcoin, runs on an algorithm that could eat up more energy than Argentina this year, Morgan Stanley estimated.

“Businesses have every incentive to avoid bitcoin’s waste. It’s very, very expensive to run things the way bitcoin runs things,” said Cornell University computer science professor Emin Gun Sirer, co-director of the school’s Initiative for Cryptocurrencies and Smart Contracts.

Innovators from top institutions such as M.I.T. and Cornell University and tech titans such as IBM and Intel are developing a number of “green” blockchain innovations to address demand by businesses for blockchain that streamlines transactions of all sorts. Blockchain can help automate transactions and records those transactions on a tamper-proof digital record available to all participants in a network.

Energy efficiency allows blockchain to scale for business needs, developers said. That means processing significantly more transactions per second at minimal cost, while accommodating an ever-expanding user base.

The potential reward has spurred a race to develop the winning blockchain solutions for companies and organizations. “The people who come out with the winning algorithms are going to capture a substantial portion of the many billions of dollars that go into back-end systems,” Cornell’s Sirer said. “We are in a phase where a thousand blockchains will bloom. And the markets will decide on a few winners.”

Differentiating from bitcoin

Bitcoin’s cousin ethereum is trying to position itself to be one of those winners among the business community. Developers have created a new blockchain that would reduce its energy consumption to almost zero and allow it to scale as well as improve security, said Mike Goldin, a software engineer at Consensys, which builds applications on top of ethereum.

“If we get to a place where ethereum scales 10,000 X, a million X, but it’s using a million X energy … game over,” Goldin said. “We’d have to drain the power of the sun to power this blockchain. If we scale ethereum, but we don’t also scale the power consumption, it’s useless.”

The move will further set ethereum apart from bitcoin, with whom it currently shares a similar blockchain algorithm called proof-of-work.

Proof-of-work, also known as “mining,” is the culprit behind bitcoin’s energy waste. It’s the process by which computers solve complex mathematical riddles in order to perpetuate the blockchain and garner new bitcoin. The computers are racing to be the one to validate the next block of transaction data and capture new coins.

As more computers mine bitcoin, the math problems get harder to crack and require even more processing power. The soaring price of bitcoin last year incentivized more machines to mine it. While the cryptocurrency’s price has since plummeted below $10,000 from its high of more than $19,000 in December, bitcoin’s recent climb called attention to its long-term sustainability problem.